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The Productivity Commission has officially begun a new study into Australia's struggling car manufacturing industry and will reveal the terms of its investigation today. Federal Industry Minister Ian Macfarlane has asked for an interim report to be completed by December 20, with a more detailed analysis to follow on March 31.
The timing of the interim report is believed to have been tailored to meet Holden's Christmas deadline, so its parent company General Motors can decide whether or not to proceed with early ground-works for future models at its Elizabeth car-making factory during the scheduled summer-holiday shutdown.
The timing of the final report is believed to have been chosen so that it is delivered after the South Australian state election in early March. Mr Macfarlane wasn't available for comment last night as he was on route to Japan for a four-day visit, during which time he will meet with senior Toyota executives.
A joint statement issued by the office of Mr Macfarlane and Federal Treasurer Joe Hockey last night said the Productivity Commission would "examine the best way that the Australian Government and Australian economy can ensure the ongoing viability of the automotive industry - including a sustainable and profitable automotive manufacturing sector".
But the Terms of Reference will likely have the car manufacturing industry worried. The inquiry will include examination of "international competitiveness, exports, workforce structure and practices, skills levels and long-term sustainability", areas where the Australian industry is notoriously weak.
The statement also said the independent Productivity Commission would investigate "the potential for Australian made cars to be exported overseas - and Australia's attractiveness as an investment location for all phases of automotive manufacturing activity".
Exports have been blunted by the strong Australian dollar and investment in new factories have been quashed by Australia's proximity to South-East Asian countries, where labour rates are one quarter of Australia's.
The Productivity Commission will also reassess the level of taxpayer support given to car makers in other countries, most of which manufacture more cars, create more jobs and export many times more vehicles to more markets than does Australia.
"The Government is already implementing significant measures that will assist the Australian automotive industry," the joint statement said. "The Government has pledged not to proceed with the previous Government's $1.8 billion Fringe Benefits Tax hit on the automotive sector. Further, we have already released draft legislation to rescind the carbon tax. The carbon tax adds, on average, $400 to the cost of every vehicle produced in Australia."
The public is invited to register an interest in the inquiry or find out more information at www.pc.gov.au.
This reporter is on Twitter: @JoshuaDowling
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